Two mutually exclusive public projects are currently under consideration. Each of the project has a useful...

 

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Two mutually exclusive public projects are currently under consideration. Each of the project has a useful life of 30 years and MARR 10%. The district official meetings has to decide on proceeding only one of the project. Project A has an initial cost of RM150,000 with RM35,000 annual operating and maintenance cost. In its first year of operation, RM100,000 revenues is anticipated followed by annual profit of RM50,000 per year. At the end of the project, the market value would be RM75,000. Project B on the other hand offers RM70,000 revenues per year with initial cost of RM300,000. Its annual operating cost is RM50,000 per year and the market value of the project will be RM30,000 at the end of its useful years. Which, if any, of these projects should be selected? Include your justification. Two mutually exclusive public projects are currently under consideration. Each of the project has a useful life of 30 years and MARR 10%. The district official meetings has to decide on proceeding only one of the project. Project A has an initial cost of RM150,000 with RM35,000 annual operating and maintenance cost. In its first year of operation, RM100,000 revenues is anticipated followed by annual profit of RM50,000 per year. At the end of the project, the market value would be RM75,000. Project B on the other hand offers RM70,000 revenues per year with initial cost of RM300,000. Its annual operating cost is RM50,000 per year and the market value of the project will be RM30,000 at the end of its useful years. Which, if any, of these projects should be selected? Include your justification.